Telkom shares dive as Korean talks end

2012-07-13 14:06

I-Net Bridge

Johannesburg – Telkom [JSE:TKG] shares dropped 4% in midday
trade on the JSE on Friday‚ soon after the operator announced that it had ended
potential strategic venture between Telkom and Korean group KT Corporation.

“Shareholders are advised caution is no longer required to
be exercised by shareholders when trading in the company’s securities. Further
announcements will be made as required‚” Telkom said.

The proposed strategic venture between Telkom and KT
Corporation was near maturity a few weeks before the government’s decision.

“At the moment Telkom needs to come up with a new strategy‚
competition is stiff. The investor expectation was that KT would bring
expertise to move Telkom forward - now the company has lost that competitive
advantage‚ which affected the shares‚” Leticia Nkumbula‚ telecoms analyst at
Africa Analysis‚ said.

The two parties had reached an in-principle agreement
regarding the terms of the venture‚ including a revised cash issue price for
the new Telkom ordinary shares to be issued to KT.

Had the venture been implemented‚ it would have resulted in
KT acquiring a strategic equity shareholding of 20% in Telkom with the
companies entering into a five-year co-source management services agreement to
formalise the relationship and identify areas of mutual strategic and business
co-operation.